Tax-help-live in canada work for u.s. company

That is if the US firm is willing to divvy up his work into employed work and contradct work.

Most firms have rules against such, so I don't think it will be that easy to get USco to pay him as a contractor while in Canada.

But I could be wrong.

If USco is unwilling to do this, then it is also unlikley that they will only collect fica on the prtion of work done in US.

AT that point is is simply best to accept that the work is done entirely as an employee -- not as self-employed at all.

That is what I am thinking, they will not pay me as a contractor. The tax situation I have been told is for me to figure out the differences. Which makes it more difficult for me to figure out especially since some of the work is done in the states and some from my home office.

Your are an employee in both countries. Count the days in each.

You would not be self-employed in this instance.

However, be aware that CRA at some point will want CPP and EI (both from you and the employer). They have mechanisms to deal with this, which may eventually force US firm to either put you on a Cdn payroll, or contract you.

That is what I am thinking, they will not pay me as a contractor. The tax situation I have been told is for me to figure out the differences. Which makes it more difficult for me to figure out especially since some of the work is done in the states and some from my home office.

If they will only pay you as an employee then legally they should register their company in Canada, obtain a Business Number, you give them a completed TD-1, they set up a Canadian payroll, perform CPP and EI withholding and issue you a T4. That's the only other legal way I'm aware of. You are effectively a Canadian employee working for them in Canada, therefore they must comply with Canadian law.

I would sit down with their HR or payroll dept. and see if you can get an exception to this rule of theirs. Because the more logical approach is as described above, register as self-employed in Canada and invoice them for the work done in Canada, then it's simple to calculate.

I can understand the logic to a rule like that for people based wholly in the US, but in this situation it's silly.

The fear -- unfounded in my opinion -- that most companies have in putting a Cdn employee on a Cdn payroll is the belief that is sets up a nexus in canada by which the Us company can become laible for corporate tax in Canada.

I have never subscribed to this notion, although I have heard business accountant types swear on it.

Any clarifaications, steven?

Only if they have Canadian earnings (which in this situation they don't) and even then if they have a payroll in Canada obviously all those earnings could be taken up by payroll expenses so profit - expenses = zero.

This is why I always tell people doing it the other way around not to do it this way because US corporation taxes are higher than Canadian ones, especially at CCPC rates. So on your CCPC you become subject to the full whack of US corporation tax on the US-source income and have all this annoying paperwork to fill in like an 1120-F and so on and you have to have a US payroll to pay it all out so you don't pay any corporation tax in the US. It's better to have two corporations, easier to do the paperwork.

Or in this situation, because he's a one-off employee, to be on a US payroll in the US and self-employed in Canada.

I'd go one better and tell him to go contractor all the way -- forget CCPC it's not of any advantage.

But the employer in this case is not buying. Perhaps a call from CRA willenlighten them, next year sometime.

Yes I agree in his situation, there is no point to a CCPC, I was illustrating the corporation tax differences. He should be on a US payroll and self-employed in Canada.

I've noticed in the various TN-1 threads (like the one about the 1099) there's a lot of people who seem to have started CCPCs and then decided to work in the US. There's no real point to a CCPC in that situation if most or all of your income is derived from the US, all it does is create a monumental headache because Canadian law requires your tax home to be in Canada if you have a CCPC. And not only do you get whacked with the full part 1 corporation tax if you move your tax home to the US, you also get hit with departure tax too on the corporation's assets.

Thus may advice to forget CCPC. Iv'e got one on another board now that was living in US and established fictitious Cdn residency just to establish a ccpc and now they are stuck with being unable to get a workable pension/education savings plan.

Who are the accounting morons forcing these CCPCs on people?!

Hi Steve,

I have a similar situation to mwberyl. I work for a US company, get a US salary, travel to the US to do some work but live in Canada and do most of my work from here. One step further, my company is in the process of establishing a Canadian business (obtaining a Canadian business number, setting up a canadian payroll..etc.). I am now being told that since my work is split between the US and Canada, even though we are switching to a Canadian payroll, the company will be witholding my taxes in the US in addition to my Canadian taxes. Is that common? I have been given a t1213 by my employer, that I need to fill out and send to the CRA. Am I supposed to estimate the days spent in the US vs Canada? How will the company withold? Based on that same estimate perhaps?

I'm very confused. Can you help shed some light on what ideally should happen in this case?